C-J YULO & SONS, INC v. ROMAN CATHOLIC BISHOP OF SAN PABLO, INC.

G.R. No. 133705. March 31, 2005

C-J YULO & SONS, INC., Petitioners,

vs.

ROMAN CATHOLIC BISHOP OF SAN PABLO, INC., Respondents.

Ponente: GARCIA, J.:

Nature of petition: Appealed to this Court by way of a petition for review on certiorari are the Decision1 dated December 19, 1997 and Resolution dated April 30, 1998 of the Court of Appeals in CA-G.R. CV No. 45392, reversing an earlier decision of the Regional Trial Court at Calamba, Laguna, Branch 34, which ruled in favor of the herein petitioner C-J Yulo & Sons, Inc., in a suit for revocation of donation with reconveyance of title, thereat commenced by the petitioner against the herein respondent, Roman Catholic Bishop of San Pablo, Inc.

Synopsis:

The ruling of the Court of Appeals that the revocation of the donation by petitioner (C-J Yulo & Sons, Inc.) was improper is in accordance with the law and applicable jurisprudence. The donation involved was considered onerous because of the burden imposed on the donee to put up and operate a home for the aged and the infirm. The Court of Appeals correctly applied the law on contracts instead of the law on donations because the donation was onerous. The violations of the conditions of the donation committed by the donee were merely casual breaches and did not detract from the purpose of the donation. The right to rescind the contract for non-performance of one of its stipulations is not absolute and only allowed for substantial and fundamental breach that would defeat the object of the parties in making the agreement.

Facts of the case: 

A parcel of land was donated to a religious corporation in 1977 with the purpose of building a home for the aged and infirm. The conditions of the donation stated that the land should be used for the specified purpose, a Green Belt must be established, a portion of the land can be used for agriculture, the donee must celebrate masses for the donor's family every year, and the land cannot be used for any other purpose or sold without the donor's consent. TCT No. T-82803 was cancelled and replaced by TCT No. T-91348 in the name of the donee, the Roman Catholic Bishop of San Pablo, Inc. In 1980 and 1986, the donee leased parts of the property without the donor's consent, which was a requirement of the deed of donation.

Donor (C-J Yulo & Sons, Inc.) filed a complaint in the Regional Trial Court at Calamba, Laguna against a donee (Roman Catholic Archbishop of San Pablo, Inc.) for alleged non-compliance with the terms and conditions of a deed of donation. The donor claimed the donee failed to construct a home for the aged and infirmed on the donated property, used the property as a cattle farm without consent, and prayed for the revocation and return of the donated property. The donee responded that it was trying to comply with the donation and the leases of the land were known to the donor since 1980. In a 1995 decision, the trial court declared the donation revoked and ordered the donee to vacate the property and hand it over to the donor. The donee appealed and in 1997, the Court of Appeals reversed the trial court's decision and upheld the donation. The donor then took the case to the Supreme Court, but the Supreme Court denied the appeal. The Court of Appeals found that the donation was an onerous one and there were violations of the terms and conditions of the donation, but the breaches were merely casual and did not detract from the purpose of the donation.

Issues:

WON the ruling of the Court of Appeals that the revocation of the donation by the petitioner (C-J Yulo & Sons, Inc.) was improper, in accordance with the law and applicable jurisprudence?

Held:

No. 

Of all the foregoing classifications, donations of the onerous type are the most distinct. This is because, unlike the other forms of donation, the validity of and the rights and obligations of the parties involved in an onerous donation is completely governed not by the law on donations but by the law on contracts. In this regard, Article 733 of the New Civil Code provides:

ARTICLE 733 Donations with onerous cause shall be governed by the rules on contracts, and remuneratory donations by the provisions of the present Title as regards that portion which exceeds the value of the burden imposed.

The donation involved in the present controversy is one which is onerous since there is a burden imposed upon the donee to build a school on the donated property.

Here, the Court of Appeals correctly applied the law on contracts instead of the law on donations because the donation involved in this case is onerous, saddled as it is by a burden imposed upon the donee to put up and operate a home for the aged and the infirm. We thus quote with approval the terse ruling of the appellate court in the challenged decision:

First, the violations of the conditions of the donation committed by the donee were merely casual breaches of the conditions of the donation and did not detract from the purpose by which the donation was made, i.e., for the establishment of a home for the aged and the infirm. In order for a contract which imposes a reciprocal obligation, which is the onerous donation in this case wherein the donor is obligated to donate a 41,117 square meter property in Canlubang, Calamba, Laguna on which property the donee is obligated to establish a home for the aged and the infirm (Exhibit C), may be rescinded per Article 1191 of the New Civil Code, the breach of the conditions thereof must be substantial as to defeat the purpose for which the contract was perfected .

Hence, considering that the donee's acts did not detract from the very purpose for which the donation was made but precisely to achieve such purpose, a lack of prior written consent of the donor would only constitute casual breach of the deed, which will not warrant the revocation of the donation. Besides, this Court cannot consider the requirement of a prior written consent by the donor for all contracts of lease to be entered into by the donee as an absolute ground for revocation of the donation because such a condition, if not correlated with the purpose of the donation, would constitute undue restriction of the donee's right of ownership over the donated property.

Thus, for as long as the contracts of lease do not detract from the purpose for which the donation was made, the complained acts of the donee will not be deemed as substantial breaches of the terms and conditions of the deed of donation to merit a valid revocation thereof by the donor. 

Finally, anent petitioner’s contention that the Court of Appeals failed to consider that respondent had abandoned the idea of constructing a home for the aged and infirm, the explanation in respondent’s comment is enlightening. Petitioner relies on Bishop Bantigue’s letter dated June 21, 1990 as its basis for claiming that the donee had altogether abandoned the idea of constructing a home for the aged and the infirm on the property donated. Respondent, however, explains that the Bishop, in his letter, written in the vernacular, expressed his concern that the surrounding area was being considered to be re-classified into an industrial zone where factories are expected to be put up. There is no question that this will definitely be disadvantageous to the health of the aged and the infirm. Thus, the Bishop asked permission from the donor for a possible exchange or sale of the donated property to ultimately pursue the purpose for which the donation was intended in another location that is more appropriate.